Opinion
Case No. 2:96-CV-812TC
May 27, 2003
ORDER
A. Background
This case involves the enforcement of a 1997 Consent Judgment and Settlement Agreement. Plaintiff Peterson Systems, International ("Peterson") manufactures YELLOW JACKET cable protectors, which surround and protect cables, cords, and tubing. Peterson filed suit against Defendant Checkers Industrial Products ("Checkers") in 1996 asserting, among other things, that Checkers was infringing Peterson's YELLOW JACKET cable protector trademark and trade dress. In May 1997, the case was settled. Checkers confessed judgment in favor of Peterson pursuant to a Settlement Agreement and Mutual Release (the "Settlement Agreement"). On September 9, 1997, the court entered a Consent Judgment.
Peterson now claims that Checkers is again manufacturing a product that infringes its trademark and trade dress. Peterson contends that Checkers's actions are in violation of the Confession of Judgment, the Settlement Agreement, and the Consent Judgement. Peterson seeks to have the Settlement Agreement enforced, either by holding Checkers in contempt of court or by modifying the Consent Judgment. Because the court concludes that it does not have subject matter jurisdiction over this matter, Peterson's motion is DENIED.
B. Discussion
The Supreme Court in Kokkonen v. Guardian Life Insurance Co. explained that a court must have a jurisdictional basis before it can enforce a settlement agreement. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 378 (1994). Peterson contends that the court has that jurisdictional basis through its inherent power to enforce the Consent Judgment it entered. In Kokkonen, the Supreme Court stated that ancillary jurisdiction over a settlement agreement exists if the district court has made the terms of the settlement agreement "part of the order of dismissal — either by separate provision (such as a provision `retaining jurisdiction' over the settlement agreement) or by incorporating the terms of the settlement agreement in the order."Kokkonen, 511 U.S. at 381. Because no provision in the Consent Judgment specifically permits the court to retain jurisdiction, the question is whether the terms of the Settlement Agreement have been incorporated into the Consent Judgment.
Peterson argues that the terms of the Settlement Agreement have been incorporated into the Consent Judgment. Peterson points out that the Consent Judgment refers to the Settlement Agreement several times. The first reference explains that the parties "have agreed to settle their disputes and the terms and conditions of such settlement are set forth in a confidential Settlement Agreement and Mutual Release." (Consent Judgment ¶ 2.) Another reference in the Consent Judgment sets forth the manner in which Peterson could collect on its Confession of Judgment. (See id., ¶¶ 3, 4.) In a paragraph addressing how Peterson could execute on the Consent Judgment, the Consent Judgment noted "that Peterson's rights and remedies relating to the Consent Judgment are expressly limited by the Settlement Agreement." (Id. ¶ 5.) The Consent Judgment "ordered, adjudged and decreed that Peterson's right to execute upon, collect upon or satisfy this Consent Judgment shall be governed by the Peterson and Checkers Settlement Agreement." (Id. at 3.)
Checkers argues that these references are not sufficient. Checkers contends that the Consent Judgment merely stated that Peterson's "ability to collect on the Consent Judgment [was] governed by the terms of the Settlement Agreement, but the Order [did] not otherwise incorporate the terms of the Settlement Agreement or make the Settlement Agreement part of its Order." (Def.'s Mem. Opp'n Mot. Enforce at 6.) Checkers relies on the decision in Hospitality House, Inc. v. Gilbert, 298 F.3d 424, 431 (5th Cir. 2002). In Hospitality House, the Fifth Circuit held "that a district court's reference in its dismissal order to an agreed motion to dismiss does not indicate an intention to make a settlement agreement attached to that motion to dismiss part of the order." See Hospitality House, 298 F.3d at 433. In dicta, the court discussed several courts of appeals decisions that concluded that "a dismissal order's mere reference to a settlement agreement is not sufficient to vest a district court with ancillary jurisdiction to enforce that agreement." Id. at 432. The court, for example, explained that the Third Circuit had held that a district court's "inclusion of the phrase `pursuant to the terms of the Settlement' in its dismissal order did not make the settlement agreement part of the order as contemplated by the Court in Kokkonen." Id. (quotingIn re Phar-Mor, Inc. Sec. Litig., 172 F.3d 270, 274-75 (3rd Cir. 1999));see also Smyth v. Rivero, 282 F.3d 268, 284 (4th Cir. 2002) (emphasizing that "[n]othing in th[e dismissal] order suggests that the terms of the parties' agreement are `incorporated' into the order by a clear indication that they must be complied with pursuant to the order itself, as opposed to the principles of contractual obligation"), cert. denied, 123 S.Ct. 112 (2002).
The court agrees with Checkers. The references in the Consent Judgment are not sufficient to make the Settlement Agreement part of that Judgment. Accordingly, the court does not have subject matter jurisdiction to enforce the Settlement Agreement.
1. Peterson's motion to enforce the confession of judgment and/or hold Checkers in contempt is DENIED.
2. All other pending motions are DENIED as MOOT.
IT IS SO ORDERED.